point. Plunging passenger numbers and soaring fuel prices led to crushingaccumulated losses in the past financial year.
There is nothing new about the chronic lack of competitiveness of AIor substandard value to the customer. What is new, indeed, is the financial abyssinto which the carrier has been led by an apparent ineffectiveness in governanceand total lack of accountability.I don't think that the term `national carrier' bears much meaning in today's Indianaviation: the behavior of all three major airlines in India has become pretty muchthe same, at the least as far as the strategic directions of the firms are concerned.What is different with AI is the fact that it never returned any dividends to itsowner, the MoCA (Ministry of Civil Aviation). On the other hand, it repeatedly hasreceived significant cash infusions, credit guarantees, etc. These practices havebeen criticized by the Auditor General/ Chief Comptroller of India before, but, as wesee today, with no learning consequences for MoCA. Also, IPOs of AI had beenpromised by MoCA back in 2000, with renewed promises for autumn 2008, butnever materialized. Why should an IPO of AI in the coming years be any morerealistic, given that the situation both in AI and the financial markets has worsenedsignificantly since then? If, by comparison, private airlines such as Jet Airways orKingfisher burn their (or their shareholders') money, sooner or later the question of accountability will be raised. We can already see how previously flamboyant ownersof airlines now are downscaling their public profile. In the case of MoCA, ever-increasing infusions of money do not seem to present any problem. I don't knowany private airline (particularly if it is as poorly run as AI) that could ask for Rs8,000 from a private investor and stand a chance of obtaining it!
How do you see the merger of AI and Indian Airlines?Craig Lawrence:
The merger between AI and Indian Airlines has not beenimmediately successful. The marriage of an internationally-oriented carrier with adomestically-oriented one poses significant challenges. The key thing will bewhether the successful aspects of each carrier can be reflected in the other one. Inhindsight, it might have been better for AI to be taken over by a verycommercially-oriented carrier to allow that commercial focus to be rolled into theDNA of the nation's flag carrier.
As my grandmother said, "Putting two sick people into the same beddoesn't make them healthy." The same reasoning may be applied to the ill-fatedmerger of Kingfisher/Air Deccan and, to a lesser extent, Jet Airways/Air Sahara. Allthese mergers were not done independently from each other, but needed importantbacking from the MoCA to go through. MoCA gave the green signal to all thesemergers within a couple of weeks (spring/early summer 2008), while applicants fornew operating licenses had been kept at bay for years. This fact alone speaksvolumes about the attitude of MoCA towards competition and equitable marketaccess to Indian aviation.Management consultants and `industry experts', many of them with links to tradeassociations or the industry/political nexus itself, wholeheartedly endorsed thesemergers. Synergies worth hundreds of crore rupees per year had been promised forthe merged AI/Indian entity. Barely a year thereafter, the consultants were gone,and the same `experts' remain silent. Integration of operations of both airlines hasbarely started, in spite of reduced demand for their respective services (whichshould make the integration exercise easier, including the layoffs of unproductivestaff, etc.) What the involved stakeholders (including unions) did agree on very